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To cite this article: Goknur Arzu Akyuz & Turan Erman Erkan (2010): Supply chain performance
measurement: a literature review, International Journal of Production Research, 48:17, 5137-5155
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International Journal of Production Research
Vol. 48, No. 17, 1 September 2010, 5137–5155
1. Introduction
Coordination of the supply chain (SC) has become strategically important as new forms of
organisations, such as virtual enterprises, global manufacturing and logistics evolve.
During the last few years, the focus has shifted from the factory level management of
supply chains to enterprise level management of supply chains (Gunasekaran et al. 2005).
Businesses becoming increasingly boundaryless (Puigjaner and Lainez 2008), increased
challenges of globalisation, increased use of outsourcing, vendor managed inventory and
advanced planning systems (APS), increased demands of integration led to a broadened
supply chain definition (Meixell and Gargeya 2005). Differences between ‘traditional’ and
‘networked’ organisations are well discussed in Gunasekaran et al. (2005), emphasising the
importance of strategic alliances, global outsourcing, shorter product life cycles,
partnership formation and collaboration, agility, responsiveness, flexibility, reverse
logistics and extended enterprise integration (integration beyond enterprise resources
planning (ERP), covering both internal and external integration).
Integration, collaboration, and the use of IT are all depicted as ‘building blocks’ of
‘house of supply chain’ in Stadtler (2005). ‘Increased importance of information systems’
to support supply chain integration and management for the new organisation; and the
idea that ‘ERP provides the digital backbone in supply chain integration’ are repeatedly
emphasised in the literature (Pant et al. 2003, Bendoly and Kaefer 2004, Gunasekaran et
al. 2004, Gunasekaran and Ngai 2004, Gunasekaran et al. 2005, Kelle and Akbulut 2005,
Akyüz and Rehan 2009).
As such, recent technological developments in information systems and technologies
have the potential to facilitate the coordination among different functions, allowing
the virtual integration of the entire supply chain. The focus of this integration in
the context of Internet-enabled activities is generally referred to as e-supply chain
management (e-SCM), merging the two fields of supply chain management (SCM) and
the Internet. e-SCM will refer to the impact that the Internet has on the integration of key
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business processes from end user to original suppliers that provide products, services
and information that add value for customers and other stakeholders (Gimenez and
Lourenço 2004).
With these trends in supply chain clearly proven, this paper aims at conducting a
critical literature review to reveal the performance measurement requirements of today’s
broadened, e-enabled supply chains.
Essentiality of performance measurement in supply chain is vital, and Gunasekaran
and Kobu (2007) mention the following as the purposes of a performance measurement
system:
. Identifying success.
. Identifying if customer needs are met.
. Better understanding of processes.
. Identifying bottlenecks, waste, problems and improvement opportunities.
. Providing factual decisions.
. Enabling progress.
. Tracking progress.
. Facilitating a more open and transparent communication and co-operation.
Performance measurement is ‘vital in strategy formulation and communication and in
forming diagnostic control mechanisms by measuring actual results’ (Wouters 2009).
The rest of the paper is organised as follows: Section 2 describes the review
methodology, Section 3 mentions the basic characteristics and contributions of the works
reviewed and Section 4 contains discussion and findings. Section 5 concludes and suggests
future research directions.
2. Review methodology
The initial reading list for the review covered 42 articles from major science-cited journals.
Because of the multi-disciplinary nature of the supply chain performance management
topic, the papers which are located at the intersection of supply chain, IT, performance
measurement and business process management were in the list to be able to provide a
broad perspective covering technology, process and people’s aspects. A taxonomy of these
papers has been made and 24 papers are found much more relevant for the intersection of
supply chain and performance measurement topics. As such, the review in this study is
International Journal of Production Research 5139
Technovation 1
Total Quality Management 1
Transportation Research 2
Total 24
based on 24 papers from major journals. Distribution of these articles with respect to
journals is given in Table 1.
The list of papers included in review and their classification with respect to their topic
and methodology are given in Table 2.
Focus, contributions and approaches are summarised in Table 3.
As can be seen in Tables 2 and 3, review style papers and questionnaire-based surveys
using statistical techniques for the analysis dominate the selected list. Some of the papers in
the list use more rigorous approaches: Perea et al. (2000) use dynamic modelling combined
with classical control theory; Puigjaner and Liainez (2008) utilise a multi-stage, stochastic
mixed integer linear model to capture the supply chain dynamics; Cai et al. (2008) suggest
an iterative analytical approach based on eigenvalues for dependance modelling of key
performance indicators (KPIs); and Hwang et al. (2008) use stepwise regression to analyse
dependancy of measures. Bhagwat and Sharma (2007) use the analytical hierarchy process
(AHP) approach for prioritising metrics. Ho (2007) adopts a simulation-based, experi-
mental approach for ERP-based supply chain system performance measurement.
The taxonomy matrix (topic versus methodology) for the reviewed papers is given in
Table 4.
5140
Topic Methodology
ERP
IT
Supplychain
E supplychain
BPM
Technology=BPMfit
Performance
measurement=
metrics
Roadmap
implementation
success
Review
Case based=
survey
Conceptual model=
framework
Mathapproaches
p p p
12 Bernardes, E. and Zsidisin, G. 2008 An examination of strategic supply
management benefits and perfor-
mance implications p p p p p
13 Lockamy, L. and McCormack, K. 2004 Linking SCOR planning practices to
supply chain performance p p p p p
14 McCormack, K. and Lockamy, L. 2004 The development of a supply chain
management process maturity
model using concepts of business
process orientation p p p p p p
15 McCormack, K. et al. 2008 Supply chain maturity and perfor-
mance in Brazil p p p p
16 Baghwat, R. and Sharma, M.K. 2007 Performance measurement of supply
chain management using the hier-
archical process p p p p
17 Cai, J. et al. 2008 Improving supply chain performance
management: a systemic approach
to analysing iterative KPI
accomplishment p p p
18 Hwang, Y. et al. 2008 The performance evaluation of
SCOR sourcing process p p p p p
19 Kanji, G. and Wong, A. 1999 Business excellence model for supply
chain management p p p p p
20 Robinson, J.R. and Malhotra, M.K. 2005 Defining the supply chain quality
management and its relevance to
academic and industrial practice p p
21 Wouters, M. 2009 A developmental approach to per-
formance measures: results from a
International Journal of Production Research
1 Meixell, M.J. and Gargeya, V.B. 2005 Global supply chain design Emerging issues in global SC Comprehensive review and classifica-
tion. Critiques emerging trends in
historical perspective. Emphasises
outsourcing, VMI, integration
across tiers, internal and external
integration, and performance mea-
surement criteria.
2 Vonderembrese, M.A. et al. 2006 Designing supply chains: Towards Product life cycle supply chain types Detailed descriptions of lean and agile
theory development matching, including agility and lean SC, tries to match product life cycles
classifications and product types with different
supply chain types. Supports with
three cases.
3 Swofford, P. et al. 2008 Achieving supply chain agility through Relationship among IT integration, SC Tests the relationships of IT integra-
IT integration and flexibility flexibility, SC agility and business tion, SC flexibility, SC agility and
performance competitive business performance.
4 Puiganer, L. and Lainez, J.M. 2008 Capturing dynamics in integrated SCM Dynamic behaviour modelling Multi-stage, multi-period, stochastic
mixed integer linear model com-
bined with control theory. Develops
a strategic-level model, uses fore-
casting, optimisation and simulation
in tandem, analyses results using
sample scenarios. The model
involves demand and price uncer-
G.A. Akyuz and T.E. Erkan
8 Gunesekaran, A. and Kobu, B. 2007 Performance measures and metrics: a SC performance measurement Comprehensive review and classifica-
review of recent literature tion. Justification for the need of
new metrics to support new organi-
sations. Need and purpose of per-
formance measurement, criteria for
successful metrics well discussed.
Classification of different measure-
ment perspectives.
9 Gunesekaran, A. et al. 2005 Performance measurement and costing Performance-based costing system for Comprehensive discussion of pressures
system in new enterprise the new enterprise and approaches for the new orga-
nisation. Direct justification for the
need of a new performance mea-
surement and costing system.
Development of a framework.
10 Yao, K. and Liu, C. 2006 An integrated approach for measuring EVA, BSC and ABC in SC Combines EVA, BSC, ABC. Suggests
supply chain performance use of various KPIs and a
framework.
11 Ho, C. 2007 Measuring system performance of an ERP-based supply chain performance Proposes an integrated method, total
ERP-based supply chain related cost measurement, to evalu-
ate supply chain performance of a 3-
echelon, ERP-based supply chain
system. Uses simulation-based vali-
dation experiments.
12 Bernardes, E. and Zsidisin, G. 2008 An examination of strategic supply Relation of strategic supply chain Survey-based study focusing on net-
management benefits and perfor- management with the concepts of work embeddedness and scanning.
mance implications network embeddedness and net- Rigorous statistical treatment.
work scanning
13 Lockamy, L. and McCormack, K. 2004 Linking SCOR planning practices to SCOR planning practice and supply Survey-based study to investigate rela-
supply chain performance chain performance relationships tionship of SCOR planning prac-
tices and performance.
14 McCormack, K. and Lockamy, L. 2004 The development of a supply chain Maturity model and performance Develops a maturity model having a
management process maturity relationship business process view. Defines 5
model using concepts of business levels of maturity and performs a
International Journal of Production Research
based studies.
(Continued)
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5144
Table 3. continued.
16 Baghwat, R. and Sharma, M.K. 2007 Performance measurement of supply Prioritisation and choice of Proposes 5 classes of metrics and
chain management using the hier- metrics and measures proposes an AHP approach.
archical process Supports with a survey.
Comprehensive review of BSC and
AHP.
17 Cai, J. et al. 2008 Improving supply chain performance Dependence and priority Challenges, intricacy dependency and
management: a systemic approach modelling of KPIs conflicts of performance measure-
to analysing iterative KPI ment system. Iterative, analytical
accomplishment approach based on eigen values.
Tries to model dependency on KPIs.
Checks the cost of improving KPIs
at each iteration.
18 Hwang, Y. et al. 2008 The performance evaluation of SCOR SCOR-based Taiwanian case SCOR overview, Taiwanian LCD
sourcing process study to evaluate sourcing sector questionnaire, stepwise
regression analysis to analyse
G.A. Akyuz and T.E. Erkan
21 Wouters, M. 2009 A developmental approach to perfor- Concept of enabling perfor- Challenges of performance measure-
mance measures: results from a mance management ment, a company-based study, need
longitudinal case study of developmental approach in per-
formance measurement, importance
of delegating the performance mea-
surement at every level of hierarchy.
Emphasises the idea of ‘metrics for
people’.
22 Stock, G. et al. 2000 Enterprise logistics and supply chain Logistics and SC structure Review section comprehensive and
structure: role of fit elements. Concept of fit develops a framework of fit between
logistics integration and SC struc-
ture. Defines fit variables and anal-
yses with a survey.
23 Geiger, S. et al. 2006 Strategy/structure fit and firm Relationship between fit and Emphasises the mediating effect of
performance performance industry concentration between fit
and performance. Contains manu-
facturing-based survey. Develops a
relation to measure return on assets.
24 Butterman, G. et al. 2008 Contingency theory ‘fit’ as gestalt: an Fit of strategy, structure and Survey-based clustering analysis for fit
application to supply chain IT of strategy, structure and IT vari-
management ables. Ends up with 6 levels of
maturity. Clustering levels can be a
base for our study. A critical appli-
cation of theory of ‘fit’ to supply
chain.
International Journal of Production Research
5145
5146 G.A. Akyuz and T.E. Erkan
Performance Roadmap/
Supply Technology/ measurement/ implementation Turkish
ERP chain BPM BPM fit metrics success implementation
Review 1, 2, 8, 20 8, 15, 20 15
15, 20
Case-based/ 11 2, 3, 6, 7, 19.2 3, 22, 3, 6, 7, 11, 12, 13, 14, 15
survey 11, 13, 23, 24 13, 14, 15, 16,
14, 15, 17, 18, 19, 20,
16, 19, 21
20, 22
Model/ 3, 6, 13, 19 3, 22, 23 3, 6, 9, 10, 14, 14, 15
framework 14, 15, 15, 17, 18, 19
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19, 22
Math 11 4, 5, 11, 11, 16, 17, 18
approaches 16
In this section, characteristics and contributions of the works reviewed are discussed in
detail under these six subheadings.
3.1 Papers that focus on ‘general trends and issues in supply chain’
Meixell and Gargeya (2005) provide a comprehensive, critical review and classification of
global supply chain literature and put forward the emerging trends in historical
perspective. Outsourcing, vendor managed inventory (VMI), integration across tiers,
internal and external integration, and the need of various performance measurement
criteria are emphasised as the main trends.
A matching between product life cycle and types of supply chain, including agility and
lean supply chain classifications, is suggested by Vonderembrese et al. (2006). Detailed
descriptions of lean and agile supply chain are provided and their work is supported with
three case studies: Black & Decker, IBM and Daimler Chrysler.
Swafford et al. (2008) investigate the relationship among IT integration, SC flexibility,
SC agility and business performance through a US case-based study. Their study reveals
the ‘domino effect’ among IT integration, SC flexibility, SC agility and competitive
business performance.
This group of papers clearly reveal the main trends and the importance of
the IT integration, flexibility, agility and lean concepts for today’s supply chain
management.
uncertainity and financials (assets, liabilities, credit policies, capacity expansion, share-
holder value, etc).
Perea et al. (2008) use dynamic modelling approach combined with classical control
theory to develop a generic dynamic framework for supply chain modelling.
These two papers emphasise the importance of capturing supply chain dynamics at
various decision levels and they are clear indications that modelling efforts to handle these
dynamics are still continuing in literature.
measurement systems and the need for the establishment of a new performance
measurement.
Gunasekaran et al. (2004) develop a framework for supply chain performance
measurement. The article provides a detailed ‘measurement and metrics classification’ and
uses a survey aiming at assessing importance within each metric group.
Three main classes of performance measures are discussed by Martin and Patterson
(2009): inventory, cycle time and financials. Effects of supply relations (organisational
structure, partnering, supplier agreements and process improvements) on the performance
measures selected are investigated via a survey-based study.
Gunasekaran and Kobu (2007) offer a comprehensive review and classification
for supply chain measurement and metrics. A trend of increasing attention on performance
measurement and metrics, both in practice and literature, is emphasised in their work.
This idea is also supported by McCormack et al. (2008). Gunasekaran and Kobu (2007)
highlights the confusion as to the classification of metrics in literature, and lacking complete
coverage of all the performance measures. Their review classifies the literature based on the
following criteria: balanced scorecard perspective, components of measures, location of
measures, decision levels, nature of measures, measurement base, traditional versus modern
measures. They treat a number of metrics in five classes: order planning, supplier evaluation,
production level, delivery and customer and they conduct an empirical research to assign
importance ratings within each class. The work is a clear support for the need of new metrics
for the new organisation.
A comprehensive discussion of pressures and approaches for the new organisation
appears in Gunasekaran et al. (2005). The study is also the direct justification for the need
of a new performance measurement and costing system.
Supporting the idea of new performance measurement system, Yao and Liu (2006)
and Ho (2007) propose different approaches. Yao and Liu (2006) suggest an integrated
approach for measuring supply chain performance, combining economic value added
(EVA), the balanced scorecard (BSC) and activity based costing (ABC), clearly emphasising
the need of overhead handling and a balanced approach. Ho (2007) focuses on ERP-based
supply chain performance and proposes an integrated method, total related cost
measurement, to evaluate supply chain performance of a three-echelon, ERP-based
supply chain system. The study uses simulation-based validation experiments.
Bernardes and Zsidisin (2008) investigate the relation of strategic supply chain
management with the concepts of network embeddedness and network scanning,
specifically focusing on the concept of embeddedness and network scanning in relation
5148 G.A. Akyuz and T.E. Erkan
management planning practices and supply chain performance based on four main
decision areas of SCOR model (plan, source, make, deliver) and result in the importance of
planning function and the importance of collaboration, process measures, process
collaboration, process credibility, process integration and information technology.
McCormack and Lockamy (2004) develop a process maturity model taking
the business orientation view, defining five general levels of process maturity and
using the survey instrument to analyse the relationship of process maturity with
performance.
McCormack et al. (2008) take the supply chain operations reference (SCOR) model
and business process orientation maturity model of McCormack and Lockamy (2004) as a
base. The study provides a comparison on the traditional versus innovative performance
measurement systems. A Brazilian survey is conducted in the study for clustering
performance of the companies surveyed. The study puts forward a clear support for the
need of new performance measurement methodologies and maturity models, emphasising
the importance of survey-based studies.
These three papers highlight the maturity and performance relationship and provide
clear evidence that literature is still in search of maturity models and roadmaps, which are
proven to have direct correlation with performance.
It is evident that modelling the hierarchical nature and dependancies among various
KPI’s is still an unresolved and challenging issue in supply chain domain.
success criteria and today’s supply chain performance management still appears to be
having difficulty in measuring the degree of collaboration, agility and flexibility.
Robinson and Malhotra (2005) focus on quality management requirements of the new
supply chain era and mention supply chain quality management concept, emphasising the
commitment to quality both inter- and intra-organisationally, again basing on the SCOR
model and balanced scorecard approach. The paper provides a clear support for the need
for further research in SC Quality management area.
Wouters (2009) mentions the concept of ‘enabling performance management’,
emphasising the need for involvement of people at all levels, starting with the
determination of the metrics. Challenges of performance measurement, need of
developmental approach in performance measurement, importance of delegating the
performance measurement at every level of hierarchy and the idea of ‘metrics for people’
are treated in detail. His previous work, Wouters and Wilderom (2008) is also referenced in
this work and the study is critical in emphasising the need for longitudinal case studies.
Stock et al. (2000) define the concept of ‘fit’ as the appropriate consistency between
logistics practices and supply chain structures and investigates the impact of fit among
channel governance, geographical dispersion and logistics integration on supply chain
performance. Their study provides support for the importance of ‘fit’ among various
supply chain parameters.
Geiger et al. (2006) investigate the relationship of strategy/structure fit and firm
performance using the mediating factor of ‘industry concentration’. They reveal a clear
need to analyse the effects of mediating factors other than industry concentration.
Buttermann et al. (2008) present an application of ‘fit’ as Gestalt perspective to supply
chain management. Fit is mentioned as ‘mediation, moderation, matching, covariation,
profile deviation and gestalts’. Their study applies fit as Gestalt perpective to search for
archetypes or ‘recurrring clusters of attributes’ which are directly related to the
performance and the use of these archetypes as a means for classification of firm
performance. Using a survey-based study, they identify six main archetypes: simple, low
performers, market performers, average players, internally integrated low performers,
masters of efficiency and two-time winners. It is emphasised that this is the first-time ‘fit as
gestalt concept’ is applied to SCM.
This group of papers clearly indicate the need for having a broad, organisation-wide
perspective of the issue, highlighting the importance of consistency among various
organisational factors. It also became apparent that the issue of ‘fit’ deserves further
attention.
5150 G.A. Akyuz and T.E. Erkan
performance measures and metrics needed to fully integrate their supply chain to maximise
effectiveness and efficiency (Gunasekaran et al. 2004). The following are pointed out as the
main problems in performance measurement by Gunasekaran et al. (2004) and
Gunasekaran and Kobu (2007):
. Incompleteness and inconsistencies in performance measurement and metrics.
. Failing to represent a set of financial and non-financial measures in a balanced
framework, some concentrating on financials, others concentrating on opera-
tional measures.
. Having a large number of metrics, making it difficult to identify the critical few
among trivial many.
. Failing to connect the strategy and the measurement.
. Having a biased focus on financial metrics.
. Being too much inward looking.
With all these problems highlighted, there seems to be no universal consensus regarding
suitable measures of supply chain quality performance, and commonly implemented supply
chain measurements are fragmented and virtually unknown (Robinson and Malhotra 2005).
Since many measurement systems lacked strategy alignment, a balanced approach and
systemic thinking, they have difficulty in systematically identifying the most appropriate
metrics (Cai et al. 2008). The work of Cai et al. (2008) also states that these measurement
systems do not provide a definite cause–effect relationship among numerous and hierarchial
individual KPIs. The fact that ‘since many measurement systems are static, they lag the
trend’ is also mentioned. The importance of hierarchy and dependance among different
KPIs are also highlighted in Hwang et al. (2008).
Gunasekaran et al. (2005) emphasise the need to handle predominant overheads
accurately, while providing non-financial information and Gunasekaran and Kobu (2007)
expressed the need and importance of using KPIs measuring ‘innovation’.
McCormack et al. (2008) compare the traditional and innovative performance
measurement (PMS) as given in Table 5, indicating the changes required over the
traditional performance measurement systems.
This table clearly puts forward the importance of long term value orientation and
compatibility among innovative requirements for today’s performance measurement.
Work by Robinson and Malhotra (2005) and Wouters (2009) clearly supports the need
for a performance measurement system taking the holistic picture, including the human
side and organisational issues.
International Journal of Production Research 5151
The above literature items provide clear proof for the deficiencies of the current
performance measurement systems and for the significant changes required over
traditional performance measurement.
agility, and business excellence requirements of the new era. As such, the issue requires a
‘balanced’, ‘organisation-wide’, ‘dynamic’ and ‘continuous learning’ approach based on
sound business process management practices.
strong support as to the immaturity of these concepts in relation to supply chain. To put it
clearly, ‘supply chain business excellence’ deserves further attention in any future research.
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